Europe’s Olive Oil Sector Poised for Recovery Despite Climate and Market Pressures

Summary

The European Union’s Agricultural Outlook report pre­dicts that the olive oil sec­tor will rebound in the next decade due to higher yields rather than land expan­sion, with Spain and Portugal expected to strengthen their posi­tions as lead­ing global play­ers. However, chal­lenges such as cli­mate change, declin­ing con­sump­tion in key pro­duc­ing coun­tries, and pres­sure on the table olive sec­tor are high­lighted, with the need for prod­uct dif­fer­en­ti­a­tion and effec­tive mar­ket­ing to main­tain com­pet­i­tive­ness amid global com­pe­ti­tion empha­sized.

Challenges abound for olive grow­ers across Europe. Still, the sec­tor is expected to deliver ris­ing yields over the next decade and adapt more effec­tively to the impacts of cli­mate change.

According to the European Union’s Agricultural Outlook report for 2025 to 2035, the olive oil sec­tor is pro­jected to rebound from the recent pro­duc­tion lows recorded in sev­eral mem­ber states.

With the total cul­ti­vated olive area expected to remain broadly sta­ble, the recov­ery is pri­mar­ily dri­ven by higher yields rather than land expan­sion, reflect­ing pro­duc­tiv­ity gains and orchard mod­ern­iza­tion.

The report fore­casts that olive oil pro­duc­tion in Spain will sta­bi­lize at an aver­age of 1.8 mil­lion tons per year. In Portugal, aver­age annual out­put is expected to reach 200,000 tons.

In both coun­tries, tra­di­tional olive groves remain pre­dom­i­nantly rain­fed. However, pro­duc­tion growth is increas­ingly con­cen­trated in irri­gated, high-den­sity, and super-high-den­sity sys­tems, whose out­put is expected to out­pace that of tra­di­tional orchards pro­gres­sively.

According to the report, these mod­ern sys­tems ben­e­fit from more effi­cient water man­age­ment, help­ing mit­i­gate cli­mate stress and becom­ing a deci­sive fac­tor in long-term pro­duc­tion sta­bil­ity.

In Italy, where tra­di­tional groves still account for most out­put, olive oil pro­duc­tion is expected to decline by about three per­cent annu­ally due to shrink­ing cul­ti­vated area and lower pro­duc­tiv­ity.

Production in Greece is also pro­jected to face head­winds, as cli­mate pres­sures and unfa­vor­able con­di­tions for main­tain­ing cul­ti­vated area are expected to keep aver­age out­put below 180,000 tons per year.

While yields are expected to improve in many regions through tech­no­log­i­cal advances, orchard renewal, and improved agro­nomic prac­tices, these gains are unlikely to off­set struc­tural con­straints across all pro­duc­ing areas fully.

The sec­tor remains exposed to sig­nif­i­cant long-term risks. Climate change is iden­ti­fied as the most crit­i­cal struc­tural chal­lenge, closely linked to extreme weather events, pro­longed droughts and increas­ing water scarcity.

The report also high­lights a grad­ual envi­ron­men­tal improve­ment, with pes­ti­cide use inten­sity in olive groves pro­jected to decline by about seven per­cent by 2035 due to improved prac­tices and struc­tural changes.

Pest pres­sure remains a seri­ous con­cern. In par­tic­u­lar, the spread of Xylella fas­tidiosa is cited as one of the most severe threats, with its dev­as­tat­ing impact in Puglia con­tin­u­ing to con­strain the sector’s recov­ery.

On the demand side, the report warns that olive oil con­sump­tion is declin­ing in sev­eral key pro­duc­ing coun­tries.

Although olive oil is still widely regarded as a healthy dietary fat, sus­tained price increases in recent years have cur­tailed con­sump­tion, par­tic­u­larly among cost-sen­si­tive con­sumers.

This trend has been most pro­nounced out­side the Mediterranean basin, where con­sumers have increas­ingly turned to lower-priced alter­na­tives such as sun­flower oil.

In Spain, per capita olive oil con­sump­tion is fore­cast to fall by about 0.6 per­cent per year through 2035, reflect­ing shift­ing dietary habits and demo­graphic change.

Similar declines are antic­i­pated in Italy, Greece, and France, with annual reduc­tions esti­mated at 0.5-1.3 per­cent.

Portugal stands apart, as ris­ing domes­tic out­put is expected to improve avail­abil­ity and afford­abil­ity, sup­port­ing higher con­sump­tion lev­els.

In non-pro­duc­ing E.U. coun­tries, olive oil’s health pro­file is expected to con­tinue dri­ving demand, with aver­age per capita con­sump­tion pro­jected to rise to about 1.2 kilo­grams by 2035.

According to the report, Spain and Portugal are set to strengthen their posi­tions as lead­ing global play­ers over the com­ing decade.

Spain’s net exports are fore­cast to increase by 5.1 per­cent, sup­ported by mod­ern­ized pro­duc­tion sys­tems and softer domes­tic con­sump­tion. Portugal’s net exports are expected to grow by 0.9 per­cent.

Most other E.U. mem­ber states are pro­jected to increase net olive oil imports by an aver­age of 4.1 per­cent per year to meet ris­ing demand.

Italy, tra­di­tion­ally one of the world’s largest olive oil importers, is expected to see declin­ing domes­tic out­put and lower con­sump­tion trans­late into a 0.4 per­cent annual reduc­tion in net imports.

Overall, the European Union is pro­jected to main­tain and slightly strengthen its global mar­ket posi­tion, with total olive oil exports expected to rise by 6.1 per­cent by 2035. The report stresses that prod­uct dif­fer­en­ti­a­tion and effec­tive mar­ket­ing will be essen­tial to pre­serve com­pet­i­tive­ness amid inten­si­fy­ing global com­pe­ti­tion.

The out­look also under­scores mount­ing pres­sure on the E.U.’s table olive sec­tor, where cli­mate stress is emerg­ing as a defin­ing chal­lenge.

Across the bloc, increas­ingly erratic weather and chronic water short­ages are under­min­ing pro­duc­tion, par­tic­u­larly in Spain, where a grow­ing share of non-irri­gated groves is becom­ing eco­nom­i­cally unsus­tain­able.

E.U. table olive pro­duc­tion is expected to edge lower in the com­ing years as cul­ti­vated area con­tin­ues to shrink, even as yield gains in irri­gated orchards par­tially cush­ion the decline.

While Spain may achieve lim­ited gains through inten­sive sys­tems, out­put in Greece, Italy and France is pro­jected to decline grad­u­ally. Portugal’s invest­ments in effi­cient water man­age­ment are expected to help sta­bi­lize pro­duc­tion.

On the con­sump­tion side, aver­age E.U. per capita intake of table olives is pro­jected to rise mod­estly from about 1.8 kilo­grams to 2.0 kilo­grams by 2035, although national trends vary widely.

Spain’s con­sump­tion is expected to con­tinue falling, while demand is fore­cast to grow in Greece, Italy and Portugal. Portugal’s per capita intake is pro­jected to reach about 0.6 kilo­grams, mark­ing the fastest rel­a­tive growth among major pro­duc­ers.

France’s con­sump­tion is expected to sta­bi­lize after strong growth over the past decade, while other E.U. coun­tries are pro­jected to see con­tin­ued increases, reach­ing around 1.1 kilo­grams per capita by the mid-2030s.

Trade pat­terns are also expected to diverge. Spain and Portugal are fore­cast to remain net exporters of table olives, while Italy is pro­jected to increase net imports by roughly 24 per­cent between 2025 and 2035.

Other E.U. coun­tries are expected to post aver­age annual import growth of about 2.2 per­cent, amid inten­si­fy­ing com­pe­ti­tion from non‑E.U. pro­duc­ers includ­ing Türkiye, Egypt, Morocco and Tunisia.

The authors cau­tion that the Agricultural Outlook should not be inter­preted as a fore­cast. Published annu­ally, it out­lines pos­si­ble devel­op­ments based on cur­rent poli­cies, mar­ket con­di­tions and mod­el­ing assump­tions. Prepared by the European Commission with the Joint Research Centre, it also draws on analy­sis from the OECD-FAO Agricultural Outlook.